This is helping SMEs receive money to invest in their business and be an alternative to bank financing.
I ran a printing business and we constantly struggled to raise capital for essential investments in the company. So in 2010 Martin McAleese launched the ‘Your Country, Your Call’ initiative which resonated with me. How to solve the small business lending problem was the key for me, because there was so much negativity in the newspapers at the time.
Around the same time, stories were emerging that Ireland had over €90bn on deposit around the country and so the question then was how do you get that money to SMEs? The total loan book for small business was €45bn, so if we could get an exchange between ordinary people and SMEs, there was a chance to solve a critical issue.
A good example would be Sober Lane Bar in Cork. Ernest (Cantillon) from the bar applied for a loan of €30,000 and it allowed him to reach out to regulars, friends and families as well as new customers.
So we did the proper checks and financial checks. From there, it went up on the website and people then bid to become part of their loan. The bidding process means that the interest rate people charge on the loan then begins to reduce as people want to invest in the business, because they are now bidding to become a part of the loan. The other aspect as well is that those who would frequent the bar now have a vested interest in seeing it perform and do well and so therefore become mouthpieces for them.
Paying investors back is much the same as paying back your bank loan. So it’s a three-year loan which gets paid back every month. They will send the money through a Linked Finance account, and then we pay that money back out to the 200 or so people who have loaned out to you.
Well it’s faster for a start. A bank loan takes about 8-12 weeks to organise. We would look at your application and the necessary credit checks and inside 48 hours your loan can up on the site. Then it’s 14 days to get the necessary funds. So inside of a month you can be ready to start putting funds to where you need them in your business.
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